How’s it going? 10 year yields are up relative to Friday. Indeed, after initial progress in lowering long rates, pretty much the entire yield curve is now up.
Figure 1: Yield curve as of 8/18 (blue), as of 8/19 (orange), as of 8/28 (green), all in %. Source: Treasury.
Notice the kink in the curve (Figure 1) from 10 years to 20-and-30 years. Duration is not as much in vogue these days. Here’s a pictue of the 10-30 spread:
https://fred.stlouisfed.org/graph/?g=1XZkY
It began moving up around the time of the felon-in-chief’s inauguration. The steepening at the long end is decidely not because of inflation expectations. Here’s that picture:
https://fred.stlouisfed.org/graph/?g=1XZlh
FRED doesn’t have term premia beyond 10 years, so I can’t show the spread between 10-year and longer term premia. However, FRED does have instantaneous term premium ten years hence for tens. Here’s are 10-year term premium and instantaneous term premium 10 years hence:
https://fred.stlouisfed.org/graph/?g=1XZlp
Notice how the spread is increasing, with ten years hence climbing faster. That’s evidence of declining relative demand for duration. There could be a number of reasons for that decline in demand, including damage to insurance and pension portfolios, increased issuance of high-duration debt from non-Treasury issuers, central banks disgorging duration from their portfolios and so forth.
Another couple of obvious reasons for reduced demand for duration in the Treasury market are rising risk at the long end and the rise in realized and expected Treasury supply at the long end; these latter two reasons are the result of policy decisions. There’d be no incentive for Bessent’s silly buy-back announcement under a better set of policies.
Anybody ever seen the episode of “Yes, Prime Minister” in which the PM says “We must do something! This is something, so we must do it!” Surely Bessent’s staff could have told him the buy-back would flop. If he has created an environment in which good staff advice is welcomed, surely staff would have told him. But Bessent had to do something, and the buy-back is something.
Tom Tiffany and Trump’s trade war will be devastating to Wisconsin’s dairy sector. The Canadian market bought substantial quantities of U.S. dairy in 2025. Overall, U.S. dairy exports to Canada were about $1.06 billion in 2025. And if the trade war persists, Canadian buyers have an incentive to develop relationships with more reliable European dairy suppliers, New Zealand and Australian suppliers. As well as increase domestic Canadian producers. Tiffany and Trump are putting an enormous hurt on Wisconsin dairy.
It is already happening in autos: “BYD Asked About Taking Over Canada Stellantis Plant, Mayor Says” https://www.bloomberg.com/news/articles/2026-08-31/byd-asks-about-buying-stellantis-stla-brampton-plant-for-buses-mayor
Meanwhile – Scott is making side deals with the Russian finance minister at the G20 meeting –
By the way, there’s trouble afoot elsewhere in the bond market. This is from today’s European Bund wrap-up at Trading Economics:
“European bond yields hit fresh multi-year highs on the final trading session of August, with Germany’s 10-year Bund yield reaching 3.3% for the first time since May 2011. French yields climbed to their highest since November 2008, while Dutch yields hit 15-year highs and Italian and Spanish yields rose to more than two- and three-year highs, respectively, as rising oil prices and hawkish central-bank signals fueled expectations for higher rates.”
Our war is their problem.
As part of his victory lap for attacking Venezuela, the felon-in-chief has claimed that the U.S. Strategic Petroleum Reserve will be refilled with Venezuelan crude oil. OK, how long might that take, under the modt optimistic scenario? The SPR is down about 400 million barrels from full. Venezuela produces between 1 and 1.25 million barrels per day. Even if the SPR buys all of Venezuelan production and we go with 1.25 million bpd, it would take 320 days to refill the SPR.
But wait! There’s more! The latest EIA Weekly Petroleum Status Report shows a continued weekly drawdown of SPR crude of around 3.7 million barrels. So if we draw 3.7 million barrels per week, and add 8.75 million (1.25 per day x 7 days) the net weekly add would be 5.05 million barrels. It would take 79 weeks, over a year and a half, to refill the SPR at that pace. But hang on, doesn’t the deal say the U.S. gets half the oil Venezuela produces? So double the times to fill the SPR – it would take over three years to fill the SPR with our share of Venezuelan crude, and that’s if Venezuela produces at the high end of its usual daily output, every day for over 3 years.
Oh, but wait again. The SPR stores both sour crude and sweet crude. Venezuela produces only sour. So if we assume half of the 400-million-barrel shortfall is sour, then we can cut the time in half again! Back to only a little over 1.5 years, but only sour crude. I guess we won’t bother to refill the sweet crude stockpile? That’s not a very strategic plan for a strategic reserve.
Oh, and since the deal says the U.S. gets its share of Venezuelan oil at cost, there’s not much incentive for U.S. firms to invest in Venezuelan oil fields. President Deals strikes again.
Trump today on Canada: “We don’t need their product. So if we cut off trade with that country, we just made $40 billion. You do a few countries like that, and we become a big money machine.”
Hard to believe he’s been bankrupt four times with his mastery of finance.
US President Donald Trump has asked tech firm Apple to rename Lake Ontario as Lake America on its Maps platform to comply with his executive order changing the name of the Great Lake, Interior Secretary Doug Burgum has said.
Burgum told Fox Business’ Mornings with Maria program on Monday that “the president has reached out to Apple directly”, adding: “I’m sure we may be seeing that change coming up soon.”
Google Maps complied instantly, but Apple has so far has dragged its feet. According to Burgum Trump directly talked to Apple. As this is Apple CEO Tim Cook’s very last day on the job, it could have been an interesting conversation.
Exactly one year ago to the day in 2025, Cook bent the knee and presented Trump with a glass and 24-karat gold plaque to curry his favor and get an exemption on its imported products from tariffs. Trump is a sucker for gold. Just everyday tariff corruption.
Pete Hegseth is on a roll. So far this year he has taken out more American generals than Iranian ones.
Today he fired the Army Chief of Staff. He has fired more than 20 generals and admirals. He has also personally blocked the promotions of 45 senior officers, most of whom are black or female. It is very rare for the Defense Secretary to intervene in the peer-reviewed promotion process, but Hegseth is set on creating a MAGA army loyally devoted to the Dear Leader.
Sorry, Army Chief of Staff, Four-star General Randy George was fired in April. Secretary of the Army Dan Driscoll was fired today.
It’s all Crazy Town. The most experienced leaders are all gone. What’s left are the ones who have no problem with executing unlawful orders in violation of military code.